India, Sept. 3 -- Present action seems to focus on the operational synergies of these mergers, implicitly referring to the profitability and operational efficiency of the banks. Nationalized banks are interlocked with monetary policies of the government and its regulations. The principal shareholder being the government of India, monetary policy rather than profitability will be government's main thrust.

Creating mega banks will increase performance risks, and therefore "we cannot afford to let it fail" paradigms of the government because failures could lead to macroeconomic repercussions. Given socialistic policies to boost growth in the rural areas driven by politics may mean that the cost of inefficiencies are borne by bank customers ...